Full Faith and Credit Act
Washington, D.C. – Congressman Tom McClintock (R-CA) speaks about the Congressman’s bill, H.R. 807, which passed on May 9th with 221 yes, 207 no.
Congressman McClintock’s prepared remarks in support of the legislation from the House floor debate:
I had hoped that amidst all the controversies gripping Congress, certainly we should at least be able to agree that the full faith and credit of the United States should not hang in the balance every time there’s a fiscal debate in Washington.
And I want to thank Chairman Camp and the Ways and Means Committee for revisions that make this solution much simpler and more practical than the original draft.
Madame Speaker, this bill simply guarantees the sovereign debt of the United States Government will be paid in full and on time, under any circumstances — even total political gridlock — and it allows the Treasury Secretary to exceed the debt limit if necessary in order to do so.
Most states have had similar provisions to guarantee their debt in their laws or constitutions for generations. Last year, in testimony to the Senate, Ben Bernanke praised these state provisions for maintaining confidence in their bonds. He told the House Budget Committee that a similar measure at the federal level would help to protect against a default, which he called a very high priority.
And yet, this President and his followers, who have taken our nation on the biggest borrowing binge in its history — who have run up more debt than almost all of his predecessors PUT TOGETHER — oppose this common-sense measure to strengthen the credit upon which that debt depends. This bill tells credit markets that even in the event of an impasse on the debt limit, their loans to this government are ABSOLUTELY SAFE.
The Democrats raise three arguments.
First, they say that guaranteeing the nation’s sovereign debt is an excuse for not paying our other bills.
What utter nonsense!
I challenge them to name one member of Congress who has ever suggested that this measure is an acceptable substitute for NOT paying our other bills.
Do they actually suggest that all these other states — that have guaranteed their sovereign debts for generations — have ever used these guarantees as an excuse not to pay their other bills?
On the contrary, by providing clear and unambiguous mandates to protect their credit first, they actually support and maintain their ability to pay for all of their other obligations.
The second argument is that this bill would pay Chinese creditors before our troops.
I would remind them that more than half our debt is held by Americans, often in American pension funds. This actually protects Americans far more than the Chinese.
But whether our loans come from China or Timbuktu – from Grandma’s Pension Fund or Johnny’s Savings Bond – without the nation’s credit we cannot pay our troops or any of our other obligations.
We are borrowing a quarter of every dollar we spend and under this administration we have amassed a debt larger than the nation’s entire economy. Our nation’s credit now carries a greater strain and burden than ever before.
This measure strengthens our credit by guaranteeing that our sovereign debt will be paid in full and on time.
Perhaps the most bizarre argument is that by guaranteeing the nation’s credit we actually undermine it and risk another downgrade in our credit rating. After all, they say, a downgrade followed the last debt debate we had in Congress.
Here are the facts: Standard and Poors officials had warned for months that Congress had to reduce the projected 10-year deficit by $4 trillion to maintain a triple-A rating. Because of Democratic intransigence, this Congress could only reduce it by $1.2 trillion. And we lost the rating.
But the opponents are correct that several officials also expressed a concern that the impasse could have caused a default in the nation’s sovereign debt.
That is precisely what this measure would protect us from in the future!
No one advocates that the government delay paying ANY of our bills – and this legislation does no such thing. Indeed, this legislation protects our ability to pay all of our other bills – because paying those bills depends on maintaining the nation’s credit.
Given the precarious state of our nation’s finances, principled disputes over HOW the debt limit is addressed are going to happen from time to time. Just a few years ago, then-Senator Barack Obama vigorously opposed an increase in the debt limit sought by the Bush administration.
When these controversies erupt – as they inevitably do in a free society — it is imperative that credit markets are supremely confident that their loans to the United States are secure.
That’s what this bill does. That’s all it does.